By Nkiruka Nnorom
Standard & Poor (S&P) Global Ratings has affirmed its long and short-term global scale issuer credit ratings on United Bank for Africa Plc (UBA) at ‘B/B’.
The rating agency also affirmed a long- and short-term Nigeria national scale ratings on the group at ‘ngBBB/ngA-2’ and assigned a stable outlook to the bank.
S&P said the ratings were informed by the bank’s ability to maintain a sound earnings and asset quality over the next 12 months despite the sluggish economy in Nigeria and the high economic risk in other parts of Africa where the group operates.
The rating is supported by the bank’s capital adequacy ratio at 19.7 per cent as at June 30, 2017, which is well above the regulatory minimum of 15 per cent, couple with an adequate risk position.
S&P observed that the stable outlook assigned to the bank was borne out of the expectation that the group’s financial profile will also remain broadly stable in the next 12 months.
The affirmation reflects our view that the group will maintain its top-tier competitive position in the Nigerian banking sector, saying that bank benefits from a good franchise in the corporate and retail segments in Nigeria and increasing geographic diversification.
“Overall, we think the group has an adequate business position. Furthermore, we believe that the group will display relatively stable asset quality and good earnings generation over the next 12 months. We assess the group’s capital and earnings as moderate under our risk-adjusted capital (RAC) framework.
We estimate UBA’s Risk-Adjusted Capital, RAC ratio (before adjustments for diversification) at 5.2 per cent for year-end 2016. We project that the RAC ratio will remain broadly stable over the next 12 months on the back of the group’s good earning capacity and expected stable cost of risk,” S&P said.
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